9911796707
TMI Blog2021 (1) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... set up by assessee in order to unravel the truth, which Revenue failed to do so. We allow the appeal of the assessee because on touchstone of preponderances of probability, we are of the considered view that the assessee has accounted for sale of 1 Lacs and also cash of 1 lacs as is mentioned in the seized documents was received by assessee and was duly recorded in the books of accounts of the assessee and offered for taxation, thus, we accept the contention of the assessee to this effect. The assessee s appeal is allowed on this ground. Addition of sales outside books - assessee posting stock covered by sales in the stock register - HELD THAT:- The assessee corrected this mistake in the stock register on 31st August 2009, after conclusion of search operations. In our considered view this is a plausible and genuine human error in posting of entry in the stock register and based upon material on record, we do not find any mala fide or malice on the part of the assessee to defraud Revenue by posting this entry wrongly in stock register, rather it is a genuine human error . Under these circumstances on touchstone of preponderance of probabilities, we hold that this is a genuine and bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. X X X X Extracts X X X X X X X X Extracts X X X X ..... d dispensary expenses as maintained by the Commissioner of Income Tax (Appeal) without appreciating the true facts correctly is wrong, hence the same is liable to be deleted in the facts and circumstances of the case. 8. That in any view of the matter assessment framed and Assessing Officer's actions as partly confirmed are abinito void, unlawful and bad in law, without appreciation of facts and utter disregard of the submissions tendered by the appellant the lower authorities based on unwarranted presumptions, surmises, conjectures and imagination only without any evidence, therefore the additions/disallowance under different head so made and maintained are unwarranted hence the same are liable to be deleted. 9. That in any view of the matter no reasonable opportunity was provided to the assessee before making the additions/disallowances under different heads which is highly unjustified and illegal. 10. That in any view of the matter the penal interest charged under various provisions of the Income Tax Act is highly unjustified and illegal in the facts and circumstances of the case. 11. That in any view of the matter the assessee reserves his right to take any further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) travelled beyond his jurisdiction by recording such findings. The appellant's case is also covered by the decision of the Apex Court reported in (2009) 319 ITR 3 (Supreme Court) in the case of CIT vs. Flexi Pack. 6. That in any view of the matter in the course of survey in the premises of third party an annexure P-6 was found and facts of which was fully explained in detail to the two lower authorities and the entries of the same also tallied with the books of accounts hence the addition as maintained by the Commissioner of Income Tax (Appeals) is highly unjustified and objectionable. 7. That in any view of the matter since the main items for manufacturing is pig iron and coal which are supported by day to day stock registers and likewise for finished goods also stock registers are maintained and recorded in books therefore addition maintained by the Commissioner of Income Tax (Appeals) is unwarranted. 8. That in any view of the matter addition of ₹ 1,02,000.00 as made by the assessing officer as per Para 4 of the assessment order and the same as maintained by the Commissioner of Income Tax (Appeals) as per Para 5.2 of his order without considering and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to say that Commissioner of Income Tax (Appeal) has erred in law and on facts in deleting the addition of ₹ 1,03,27,195/- on account of alleged unexplained purchases but since the matter was properly examined by C.I.T. (Appeal) hence his action is correct in deleting the addition. 3. That in any view of matter the learned C.I.T. (Appeal) is perfectly justified in deleting the addition of ₹ 81,015/- on account of freight charges. 4. That in any view of matter addition of ₹ 1,16,50,023/- maintained out of the addition of ₹ 3,08,98,592/- is highly unjustified and liable to be deleted and rejection of account is not correct specially when provision of Section 145(3) is not invoked by the assessing officer hence maintained addition is liable to be deleted. 5. That in any view of matter addition of ₹ 1,02,000/- as maintained by C.I.T. (Appeal) as per para 5.2 of his order is not correct as the addition maintained without considering the facts and circumstances of the case. 6. That in any view of matter it not correct to say that the order of C.I.T. (Appeal) being erroneous in law and on facts. 7. That in any view of matter the respondent reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any view of the matter addition of ₹ 1,31,880/- as made and confirmed by the two lower authorities are highly unjustified and incorrect as this is not any undisclosed income as presumed by the assessing officer rather the amount is fully recorded in the books of accounts at different places, hence the addition is liable to be deleted in the facts and circumstances of the case. 7. That in any view of the matter a part sum of ₹ 5,749/- out of the disallowance of ₹ 11,498/- made under the head general expenses as maintained by the Commissioner of Income Tax Appeal is highly unjustified and illegal in the facts and circumstances of the case, hence the maintained part of the sum also deserves to be deleted. 8. That in any view of the matter a part sum of ₹ 4,136/- out of the disallowance of ₹ 8,273/- made under the dispensary expenses as maintained by the Commissioner Income Tax (Appeal) is unjustified and incorrect in the facts and circumstances of the case, hence the same is liable to be deleted in interest of justice. 9. That in any view of the matter assessment framed and Assessing Officer's actions as partly confirmed are abinito void, unlaw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pursuant to alleged search and seizure operations u/s 132(1) of the 1961 Act, allegedly on 27.08.2009 are null and void as there was no search and seizure operations conducted by Revenue against the assessee u/s. 132(1) of the Income Tax Act, 1961, on 27th August 2009. Since this legal jurisdictional ground raised by assessee goes to the root of the matter, the Bench on the earlier occasion when these appeals came up for hearing before the Bench, directed learned CIT-DR to file copies of warrant of authorization issued by Revenue against the assessee and Panchanama's prepared during the course of search operations claimed to be carried out by Revenue u/s 132(1) of the 1961 Act, on 27.08.2009 against the assessee. Pursuant to such directions issued by the Bench, now learned CIT DR has filed copies of warrant of authorization which were issued by Revenue against the assessee in connection with the aforesaid search and seizure operations conducted by Revenue against the assessee u/s 132(1) of the 1961 Act, on 27th August, 2009. The copies of Panchnama's prepared during the course of search operations on 27.08.2009 are also filed by Revenue with the tribunal. The counsel of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 (Asstt. Year- 2007-08)-Assessee's Appeal 5. Now coming to the merits of the additions made by AO which were later sustained by learned CIT(A). The learned CIT(A) has allowed part relief to the assessee against the additions made by the AO. The assessee being aggrieved by additions as were sustained by learned CIT(A) for ay:2007-08 has come in appeal before the tribunal by filing second appeal, while The Revenue has not come in appeal for ay: 2007-08 against relief granted by learned CIT(A) to the assessee while adjudicating first appeal. At the outset, learned counsel for the assessee submitted before us that ground no. 1 to 4, and 6 to 11 raised by assessee in memo of appeal filed by assessee with tribunal are not being pressed and prayers are made for dismissal of these grounds as not being pressed. The learned CIT DR raised no objection to dismissal of ground no. 1 to 4 and 6 to 11 raised by assessee in memo of appeal filed with tribunal, as not being pressed. After considering contentions of both the parties, we dismiss ground numbers 1 to 4 and 6 to 11 raised by assessee in memo of its appeal filed with tribunal, as not being pressed. We order accordingly. 6. This leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s granted by learned CIT(A). 7. Regarding other transactions of ₹ 1 Lac in cash payment made to assessee as is recorded in aforesaid seized material number LP-19/page 41 against which said Mr. Hulas Sharma of M/s Sudama Singh & Sons asked for receipt of ₹ 1 Lac, was disbelieved by AO and also by learned CIT(A) who was pleased to confirm the addition to income of the assessee. Before us, similar contentions were made as were made earlier by assessee before learned CIT(A) and the AO, that bill no. 126 dated 28th November, 2006 for ₹ 1,00,002/- for supply of chaff cutter machine and spare parts, was raised in favour of Mr. Mukesh Kumar Singh, Purani Gurhati, Chhapra, Bihar, which bill is placed at paper book page no. 51. The copy of ledger account of M/s Mukesh Kumar and Company in the books of the assessee for financial year 2006-07 is also placed in paper book at page number 49. It is submitted that both 'M/s Sudama Singh & Sons' and also 'M/s Mukesh Kumar and Company' ware related parties of the same group and even their addresses are same. It is submitted that invoice of ₹ 1,00,002/- for supply of chaff cutter machine and spare parts, was raised in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) could have made direct enquiries from relevant persons by issuing summons under section 131 of the Act or could have called for information by issuing notice under section 133(6) of the Act or by invoking other provisions of the 1961 Act, which the authorities below failed to do so . We have also observed that the total sale of the assessee in the year under consideration was ₹ 4,08,34,195/. The bill no. 126 dated 28.11.2006 in favour of Mr. Mukesh Kumar Singh, Purani Gurhatti, Chhapra, Bihar ( which is the same address as of M/s Sudama Singh and Sons )was issued on 28.11.2006 for ₹ 1,00,002/- for sale of chaff cutters machine and spare parts which was issued much prior to the date of search carried on by Revenue against assessee u/s 132 of the 1961 Act, on 27.08.2009. The assessee raised bill no. 125 dated 28.11.2006 for ₹ 2,06,204/- in favour of M/s Sudama Singh & Sons and both the parties has same address. Further, the bills raised are printed one with bill number pre-printed on the invoice. Further, in the said invoice even the Lorry/truck number is mentioned in which the goods were transported by assessee viz.MP 17/7917 to said Mr. Mukesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para's of this appellate order that search and seizure operations were validly conducted by the Revenue under section 132(1) of the 1961 Act against the assessee on 27.08.2009, we are proceeding to adjudicate ground of appeal nos. 5 and 6 raised by assessee in memo of appeal filed with tribunal. Vide ground of appeal no. 5, the assessee is contending that there was seizure of the stock registers of the assessee by Revenue marked as Annexure R-9 and there was a bonafide error in the said stock register, wherein there were 125 numbers of chaff cutter machines sold to M/s Raj Machinary Store, Rajendra Path, Patna, Bihar, vide bill no. 68 dated 24th June, 2009 (challan number 64 dated 24th June 2009), but due to human error entry was made in the stock register of 135 chaff cutter machines on 24th June 2009, which was a bonafide human error and the same was later corrected by the assessee suo moto after the conclusion of search proceedings, on 31st August, 2009. The AO and learned CIT(A) disbelieved the contentions of the assessee and made addition to the income of the assessee to the tune of ₹ 25,750/- on account of allegations of making sales outside books. Before us, similar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invoice, and the assessee cannot be saddled with tax liability merely on the ground that there was some human error while making postings in the stock register. There is no malice and malafide evident based on material on record on the part of the assessee to evade taxes or defraud Revenue. The assessee has already corrected the said mistake in posting of stock covered by sale invoice by reversing the said error / entry on 31st August 2009. The assessee is a private limited company and the accounts of the assessee are subject to audit. We have also observed that the turnover of the assessee during the year under consideration was to the tune of ₹ 8.38 Crore and the only discrepancy in the stock register which is found by Revenue for the year under consideration was to the tune of ₹ 25,750/- which is a very small fraction of total sales declared by assessee. Thus, on totality of circumstances and on touchstone of preponderance of probabilities, we hold that this is a genuine and bonafide error made by the assessee while posting stock covered by sales in the stock register and we order deletion of addition of ₹ 25,750/- as was made by the AO which was later confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Baijnath and Sons, Gazipur. Thus, explanation offered is that the assessee has sold these items as mentioned in seized material to M/s Baijnath and Sons, Gazipur and purportedly cash was received by assessee from said party. Thus, we have perused the ledger account of M/s Baijnath and Sons which is filed by the assessee and placed in paper book., and it is observed that the assessee is selling material to this party. The assessee is engaged in the business of manufacturing of agricultural equipment's such as chaff-cutter machine, Osai-fan, cane-crusher and thresher etc., and sale of these agricultural equipment's. The assessee is not selling coal, Kiwad, Iron etc. which is found mentioned in the seized document, rather the assessee is buying these items. Thus, explanation of the assessee cast serious doubts and is against the normal conduct of the business of the assessee. This amount of total material value of ₹ 87,523.75 is not reflected in books of accounts by sale / purchase invoice on 22.06.2009. The amount of ₹ 70,000/- shown to have been received in cash by assessee on 22.06.2009 is not demonstrated to be reflected in cash book. We are of the considered view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is engaged in the business of manufacturing of agricultural equipment's such as chaff-cutter machine, Osai-fan, cane-crusher and thresher etc., and sale of these agricultural equipment's. These appears to be purchases made by assessee. The assessee is explaining these transaction to be cash payment made against purchases made of Silica Sand from Badri Prasad Amar Nath on 30.06.2009 vide invoice number 21 for ₹ 12,869.90 and invoice number 22 dated 01.07.2009 for ₹ 13238.90, and it is explained that the payments were made of ₹ 12869.90 on 02.07.2009 and ₹ 13,238.89 on 07.07.2009. The document clearly speaks that there was a total transaction of ₹ 35,658/- on 23.07.2009 and an advance was already paid of ₹ 25,000/-. This transaction of ₹ 35,658/- of supplies is not demonstrated to have been recorded in books of accounts. Further addition of ₹ 9250/- on account of transaction of ₹ 9250/- for material supplies on 25.08.2009, the corresponding invoice is not shown to have been reflected in books of accounts for both the above supplies of material. Further, no connection/nexus between 'Santosh' as mentioned in seized document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th tribunal in ITA No. 152/Alld/2013 for ay: 2009-10, and they should be dismissed as not being pressed. The learned CIT-DR did not object to the dismissal of ground of appeal nos. 1 to 3 and 8 to 11 raised by assessee in memo of appeal filed by assessee with tribunal as not being pressed. After hearing both the parties, we dismiss ground of appeal nos. 1 to 3 and 8 to 11 raised by assessee in memo of appeal filed by assessee with tribunal in ITA no. 152/Alld./2013 for ay: 2009-10, as not being pressed. We order accordingly. 14. Now in cross appeals filed by Assessee as well by Revenue, the issue in dispute vide ground of appeal number 4 to 7 in assessee's appeal and ground of appeal number 1 and 2 in Revenue's appeal, are with respect to the additions being made on account of purchases being made by the asessee. The learned CIT(A) has granted part relief to the assessee while adjudicating first appeal filed by assessee, and against the part relief so granted by learned CIT(A), the Revenue has come in appeal before the tribunal, while the assessee being aggrieved by additions sustained by learned CIT(A) has come in appeal before the tribunal for the additions sustained by learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Scrap ii) Coal 697.380 50740182 Issue Production + Wastage i) Pig Iron & Scrap ii) Coal 697.380 19837535 1615575 29287072 3. Closing Stock i) Pig Iron & Scrap ii) Coal iii) Work in Progress 80.225 Not Mentioned 13094470 1023890 1611520 Closing Stock i) Pig Iron & Scrap ii) Coal iii) Work in Progress 80.225 143.840 Nil 1750514 1023890 Nil 11343956 Nil 1611520 4. Closing Stock of finished goods 144.146 6777040 Closing Stock of finished goods 144.146 8388555 1611515 The AO had observed that weight of items in quantity as are mentioned of purchases, closing stock and consumption(see chart above) are tallying in document impounded from CA during survey operations and the audit report, but the values are varying. The assessee was asked by the AO to explain the difference in the figures of purchase, consumption and stock of raw material and finished goods between the document impounded during survey operations conducted by Revenue u/s 133A on CA M/s Gupta Sanjay and Associates and the figures certified in the audit report by the CA. The assessee explained that said document impounded from the premises of M/s Gupta Sanjay & Associates was with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased from said concern, and these purchases are duly reflected in ledger, books of accounts and audit report and these are recorded transactions of the assessee duly declared to Revenue. The AO disbelieved the contentions of the assessee and made additions to income of the assessee to the tune of ₹ 1,03,27,195/- as unexplained purchases, vide assessment order dated 28.12.2011 passed u/s 153A(b) of the 1961 Act.. 17. The assessee being aggrieved by assessment framed by AO filed first appeal with learned CIT(A), which was partly allowed by learned CIT(A) . The learned CIT(A) accepted the contentions of the assessee so far as purchases made by assessee from M/s Benaras Steel Traders, Motiakhan, Mandy, Gobindgarh, Punjab to the tune of ₹ 1,03,27,195/- and additions stood deleted to that effect by learned CIT(A) by holding that purchases made by assessee from M/s Benaras Steel Traders are genuine and duly supported by purchase invoices, transport bills, confirmation of account from M/s Benaras Steel Traders, payments being made by cheque/draft which are sufficient evidences to hold that purchases from this party M/s Benaras Steel Traders are genuine. The learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ledger which is placed in paper book at page 234 to 287, where ledger account of Purchases and of Store and consumables is placed. It was submitted that books of accounts of the assessee were accepted for both the preceding year as well for succeeding year. It was submitted that there was no suppressed income / stock. It was submitted that if the additions are sustained then GP ratio will be as high as 180% which is in the realm of impossibility. Our attention was also drawn to page 102-103 of the paper book wherein details of stock, purchases, production and consumptions are placed. It was submitted by ld. Counsel for the assessee that the assessee is carrying on same business for last several years and no such addition has been made by Revenue in any of the earlier years. It was submitted that stock has been accepted in earlier years and only for this year the addition has been made . The learned CITDR has submitted that the assessee has inflated its purchase in books of accounts and unexplained purchases were added rightly by AO. The learned CIT-DR relied upon the appellate order passed by learned CIT(A) so far as additions were sustained by learned CIT(A) and on assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year i) Pig Iron & Scrap ii) Coal 697.380 50740182 Issue Production + Wastage i) Pig Iron & Scrap ii) Coal 697.380 19837535 1615575 29287072 3. Closing Stock i) Pig Iron & Scrap ii) Coal iii) Work in Progress 80.225 Not Mentioned 13094470 1023890 1611520 Closing Stock i) Pig Iron & Scrap ii) Coal iii) Work in Progress 80.225 143.840 Nil 1750514 1023890 Nil 11343956 Nil 1611520 4. Closing Stock of finished goods 144.146 6777040 Closing Stock of finished goods 144.146 8388555 1611515 The authorities below had observed that weight of items in quantity as are mentioned of purchases, closing stock and consumption(see chart above) are tallying in document impounded from CA during survey operations and the audit report, but the values are varying. The assessee on its part had explained that said document impounded from the premises of M/s Gupta Sanjay & Associates was with respect to raw material namely Pig Iron and Coal, as is mentioned in the impounded document, but there are several other materials, consumables etc. which were purchased by the assessee and which are used in manufacturing activities carried on by assessee, which are not includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. We have also observed that impounded document marked as Annexure P-6 from the office of CA, has written Pig iron and Coal mentioned on the said document and then quantitative and value details of materials are mentioned. It is also observed that in taxITA audit report para 28, quantitative details are given which tallied with the quantitative details in the impounded material, but in tax-audit report there are no mention of the description of material such as Pig Iron and Coal. The assessee has explained that this quantitative details in taxaudit report is also concerning Pig Iron and Coal but there is no mention of the same in tax-audit report. The counsel for the assessee has stated that if these additions are sustained, then the GP ratio will go upto 180%. It is also claimed by ld. Counsel for the assessee that same business was carried on by assessee as was conducted in earlier years and no such addition was made by Revenue in preceding years and it is for only this year, the additions have been made. The assessment order dated 19.12.2011 (pb/page 352) passed under VAT is also placed on record. There is a prima-facie merit in the contentions of the assessee, but the grieva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in Revenue appeal concerning purchases made by assessee from M/s Benaras Steel Traders is also set aside and restored to the file of denovo adjudication, in the same manner as decided by us in assessee's appeal. The C.O. filed by assessee against Revenue's appeal is in support of learned CIT(A) appellate order. Since, we have restored the issue in Revenue's appeal concerning purchases to the file of the AO for fresh adjudication, the C.O. has become infructuous and is dismissed . We order accordingly. 21. There is another issue in Revenue appeal for ay: 2009- 10 which concerns itself with relief granted by ld. CIT(A) to assessee by deleting additions to income made by AO by disallowing expenses towards freight charges of ₹ 81,015/- claimed by assessee, which stood allowed by ld. CIT(A) in the first appeal filed by assessee. The learned CIT-DR relied upon order of the AO, while ld. Counsel for the assessee relied upon the appellate order passed by ld. CIT(A). We have heard rival contentions and perused material on record. It is observed that the assessee has claimed to have paid freight expenses of ₹ 40,547/- and ₹ 40,469/- to Super Fast Transport Company, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
